Car Payment Calculator

How it works

A car payment is a fixed monthly amount that clears an auto loan over its term. Before any interest is figured, the calculator works out how much you actually borrow: the price plus sales tax and fees, less your cash down and whatever your trade-in is worth beyond what you still owe on it. The payment then comes from the standard amortized loan formula:

• P — the car price
• T — sales tax: your rate times the price minus the trade-in value
• F — title, registration and dealer documentation fees
• D — your cash down payment
• V − O — trade-in value minus what you still owe on it; when it is negative, the shortfall adds to the loan
• i — the monthly rate (APR ÷ 12)
• n — the number of payments (years × 12)

With the defaults, a $32,000 car picks up $2,240 of sales tax at 7% and $700 in fees, an out-the-door price of $34,940. Take off $5,000 down and you finance $29,940. At 8% over 5 years that is about $607 a month, and $6,485 of what you repay is interest.

The chart shows the balance falling faster each year as more of each payment shifts from interest to principal.

✓ Every result is checked against independent reference math. See how we test the calculators →

A worked example: trading in a car you still owe on

You have agreed on a price of $32,000 for your next car. Your current one is worth $10,000 as a trade, but you still owe $4,000 on it, and you are adding $2,000 in cash. Sales tax is 7%, fees come to $700, and the loan is 8% APR over five years.

The trade's equity is $6,000, its value minus the payoff. Because tax is charged on the price after the trade credit, you are taxed on $22,000 rather than $32,000, so the tax comes to $1,540 and the out-the-door price to $34,240. Take off the $6,000 of equity and the $2,000 down and you finance $26,240.

Your payment is $532/month, with $5,683 of interest over the term.

Leave the old car out of the deal and finance the same purchase with only the $2,000 down, and the payment climbs to $668, with $7,134 in interest. Now flip it: if you owed $13,000 on that $10,000 trade, the $3,000 shortfall joins the new loan, you finance $35,240, and the payment rises to $715. Same car, three very different payments, and the trade decides which one you get.

Sales tax, fees and your trade-in

Three things sit between the sticker and the loan, and each one moves the payment. Getting them right is the difference between a payment you planned for and the one in the finance office.

• Sales tax. Most states tax only the price left after the trade-in credit, so a trade trims your tax bill as well as your loan. A few, California among them, tax the full price. If yours is one of them, add your tax rate times the trade-in value to the fees field.
• Fees. Title and registration are set by your state. The dealer's documentation fee is not, and it runs from under $100 to several hundred dollars, so ask for every fee in writing before you sign.
• Rolled in or paid up front. Here tax and fees are financed with the car, which is how most buyers handle them, so interest runs on them for the whole term. Paying them in cash keeps them out of the loan.
• Trade-in equity. Only the part of the trade's value above its loan payoff lowers what you borrow. A paid-off trade counts in full, exactly like cash down.
• Owing more than it is worth. If the payoff tops the trade's value, the gap is added to the new loan, so you start out owing more than the new car is worth. The negative equity calculator shows how deep that hole is.

How much to put down on a car

The down payment is the one number you fully control at signing, and it shapes everything after it: the size of the loan, the payment, the interest, and how long you owe more than the car is worth. The result above shows what your cash and trade equity add up to as a share of the price, and what 20% would take.

• New car: 20%. A new car sheds value fastest in its first year, and a fifth of the price down roughly covers that drop, so the loan never sits above the car's value.
• Used car: 10%. Someone else already took the steep early depreciation, so a smaller share keeps you above water.
• Trade equity counts. Equity in your old car does the same job as cash, which is why the result adds the two together before comparing them with 20%.
• Rebates count too. A manufacturer's cash-back offer can go toward the down payment instead of into your pocket.
• Keep a cushion. Do not empty your emergency fund to reach 20%. A slightly bigger payment beats having no cash when something breaks.

Keeping the payment healthy

• Watch the term. A 4 or 5 year loan costs more per month than a 7 year one but far less in total interest, and it keeps you above water sooner.
• Shop the rate. Getting quotes from a credit union or bank before you visit the dealer gives you a rate to beat, and even a point or two matters over the loan.
• Settle the price first. Agree on the out-the-door price before the monthly payment comes up, so a long term cannot hide a high price.

How your payment splits between interest and principal

Every payment is the same size, but what it does changes over the life of the loan. Early on, most of it covers interest on a large balance and only a little chips away at the principal. As the balance shrinks, the interest charged shrinks with it, so more of each payment goes to principal and the balance drops faster every year.

The chart above traces that curve.

• Front-loaded interest. On the default loan, the first payment is mostly interest, so the balance barely moves in the opening months.
• The crossover point. Somewhere past the midpoint, the principal share of each payment overtakes the interest share and the payoff picks up speed.
• Why early extra helps most. A dollar of extra principal now cancels all the future interest that dollar would have carried, so overpayments early save far more than the same dollars late.
• The last stretch flies. By the final year almost the whole payment is principal, which is why the balance drops off a cliff near the end.

The costs the payment leaves out

The monthly loan payment is only one line in what a car truly costs to own. A stack of other bills rides along with it, none of which appear in the figure above, and skipping them is how a payment that looked affordable starts to squeeze the rest of your budget. Price the whole picture before you sign.

• Insurance. Premiums swing with the car, your record, and your area, and a newer or financed car usually requires fuller coverage than an older one.
• Fuel and maintenance. Gas, tires, oil, brakes, and the occasional surprise repair add up every month whether or not you set money aside for them.
• Yearly registration and taxes. The fees above cover the first registration only. Renewals every year, and in some places a yearly property tax on the vehicle, land on top of the loan payment.
• Depreciation. The value the car quietly loses each year is a real cost, and you feel it the day you sell or trade it in.

How the term changes the deal

Stretching a loan over more months lowers the monthly payment, which is exactly why long terms are so easy to agree to on the lot. The catch is that the same car costs you more the longer you finance it, and you spend more of that time owing more than the car is worth. Weigh both numbers, not just the payment, before you settle on a term.

• A shorter term. The payment is higher, but you pay far less total interest and build equity quickly enough to stay above water.
• A longer term. The payment is lower, yet the total interest climbs and you can sit underwater for years if anything goes wrong.
• A useful test. If a car only fits your budget at 72 or 84 months, treat that as a signal to shop a cheaper car rather than reach for a longer loan.
• The sweet spot. For many buyers, 48 to 60 months keeps the payment livable without piling on interest, as long as the payment genuinely fits.